Sotheby's CFO Calls the Bottom of the Art Market
Sotheby's is calling the bottom of the art market. The company has spent a year getting battered by an art market unwilling to spend a fortune (as it had in recent years) and a financial market unwilling to tolerate the outcome. Quarterly earnings fell 87 percent, reflecting how dire the situation has become. For contemporary art, the average auction price fell 76.2 percent from May 2008 to the present. Nonetheless, Sotheby's CFO has said that unless there's some unknown floating around out there, we've seen the worst of the art slump.
For every $100 in auction sales in the second quarter of 2009, Sotheby's picked up $21.30 in commission revenue – up 41 percent from a year earlier. This increase occurred because there were fewer sales of high-priced lots. Basically, low inventory quality drove this ratio higher. Expensive pieces tend to have lower commissions. Auction-related revenue plunged by more than 50 percent for the first half of the year, to a mere $197 million.
Let's hope the CFO is right on this – we all want an art market comeback.